The Art of the Deal

Perhaps more difficult to embrace than financial planning is the art of negotiation.

Growing up, I saw two very different approaches to personal finance. Both of my parents were good savers, but that is were any similarity between their approach to finance ended. Dad’s investing style: calm, disciplined, balanced, thoughtful, intuitive, enthusiastic, and confident. Mom’s investing style: undisciplined, impulsive, emotional, intellectually-detached, and timid. Over the years I saw another difference: Dad’s approach was extremely successful and Mom’s was, well, not.

One quick example. Dad was buying a new SUV. He found one he wanted and was negotiating on price. He was making headway getting a $1000 off then another $1000. The sticker price was a joke. They started perhaps $4500 apart and whittled the difference to about $2000. The car salesmen was starting to make pained expressions, but I could tell that they were not genuine. Dad would walk away and the salesman would chase him down like a puppy, only his tail wouldn’t wag. Then Mom lost it. She got mad and told Dad to quit beating up the poor salesman. She said, “Our SUV is shot; we’re stuck here and we need a vehicle today.” OMG, Dad dutifully took the current salesman’s offer. I was stunned. In 30 seconds Mom had managed to turn Dad’s hard-earned position of strength 180 degrees. I had seen my Dad negotiate before and I wanted to see if he would get the full $2000 or just settle for $1500. On the way out the door, while Mom was out of earshot, Dad said, “You know, Mom just cost us $1500?” I nodded yes. I was still in mild shock, but I knew he was correct. I was attending a 12-round prize fight and Mohammad Ali’s corner had just threw in the towel — in the 3rd round!

P.S. — Cover your eyes, a tiny bit of math. Let’s say that in 30 seconds $1500 was lost. That $3000 in a minute, or $180,000 lost in a hour. Perhaps an odd way of seeing things, but that’s how my mind works. And there is a kernel of Gestalt truth to it.